Question

Rekha borrowed Rs. 40,000 for 3 years at 10 % per annum compound interest. Calculate the interest earned in the second year.

Answer 1

Simple Interest $I=\frac{PNR}{100}$
Here for first year,
$P=Rs40,000$
$N=1year$
$R=10$ %
So, Interest at the end of 1st year $I=\frac{40,000\times 1\times 10}{100}=Rs4,000$
And for second year,
$P=Rs40,000+Rs4,000=Rs44,000$
$N=1year$
$R=10$ %
$I=\frac{44,000\times 1\times 10}{100}=Rs4,400$